Earnings call transcript: HusCompagniet Q3 2025 sees revenue growth, market share gains

HusCompagniet reported a strong performance in Q3 2025 with a 35% increase in revenue, reaching DKK 110 million. The company delivered 713 housing units, marking a 25% rise from the previous year, and expanded its market share significantly. Despite these achievements, the gross profit margin fell to 13.9%, a decrease of 6.3 percentage points year-over-year. The company's stock saw a modest increase of 0.73% in early trading, reflecting investor confidence in its strategic direction.

Key Takeaways

• Revenue surged by 35% to DKK 110 million in Q3.
• Market share increased from 3% in 2023 to 10% in 2024.
• Gross profit margin declined by 6.3 percentage points to 13.9%.
• Stock price rose 0.73% following the earnings release.
• Order backlog grew 57% to DKK 2.2 billion.

Company Performance

HusCompagniet demonstrated robust growth in Q3 2025, driven by increased housing deliveries and an expanded market presence. The company improved its market share significantly, capitalizing on the solid Danish economy and high employment rates. However, the decline in gross profit margin indicates pressure on profitability, which the company aims to address by focusing on margin improvement over market share gains.

Financial Highlights

• Revenue: DKK 110 million, up 35% year-over-year.
• EBITDA: DKK 8 million with a margin of 0.9%.
• Net debt increased to DKK 309 million from DKK 245 million.
• First 9 months revenue: DKK 2.017 billion, a 31% increase.

Outlook & Guidance

HusCompagniet projects 2025 revenue between DKK 2.9 billion and DKK 3.1 billion, with an EBITDA target of DKK 60-80 million. The company expects to deliver around 1,000 housing units in 2025. However, earnings will be negatively impacted by three B2B projects through 2027.

Executive Commentary

CEO Martin emphasized the company's focus on improving margins, stating, "We will have a clear focus on improving margins in submitted tests ahead of winning market shares." CFO Allan highlighted the importance of profitability and risk management, noting, "Profitability is important, and risk and contractual risk management is important going forward."

Risks and Challenges

• Declining consumer confidence could impact future sales.
• Increased net debt may affect financial flexibility.
• Margin pressure from rising costs and competitive pricing.
• Dependence on the Danish housing market's stability.
• Potential negative impact from B2B projects on earnings.

Q&A

During the earnings call, analysts inquired about the lower-than-expected October sales and customer caution in signing contracts. The company acknowledged these challenges and is exploring cost adjustments and capital allocation strategies to maintain profitability.

Full transcript - HusCompagniet AS (HUSCO) Q3 2025:

Martin, Company Executive/CEO, HusCompagniet: We start with the earnings adjustment announced two weeks ago. On slide two. We completed a review of the fully submitted test project's portfolio and had to adjust earnings guidance. This was based on three key factors that, unfortunately, all impact earnings performance. Firstly, we had to make write-downs on three ongoing B2B projects. Secondly, we saw a more negative effect than expected from the projects in HE elements that was reported in Q2 reports as well. Thirdly, we have seen postponement on other B2B projects because building permits have been received later than expected. The performance in these projects in submitted tests is, of course, very unsatisfactory. The submitted test segments account for 22% of group revenue and 31% of our net order backlog in Q3.

The three B2B projects announced for around half of our current net order backlog in submitted tests, so this has a significant impact on the business area. The review showed that our other active B2B projects are performing as expected. The net order backlog stood at DKK 697 million at the end of Q3, and we had several active and well-performing projects progressing to plan during the quarter. We were pleased to complete three of these projects in Q3 and deliver them to satisfied customers, just like we have done with a number of other projects in recent years. We will take all necessary steps to improve performance and profitability in the submitted test business by learning from challenges and healthy projects alike.

After growing our market share from around 3% in 2023 to around 10% in 2024, we will have a clear focus on improving margins in submitted tests ahead of winning market shares. We will look at all parts of our process, including calculation, tendering, contracts, and cooperation internally and with developers. We will focus on building sustainable and long-term partnerships with developers in carefully selected projects. With this, Allan will cover the challenges in our submitted test business in greater detail. Please turn to slide three.

Allan, CFO, HusCompagniet: Thank you, Martin. I will briefly cover the three key factors mentioned by Martin before. I will highlight some of the specific challenges for each of them. The three B2B projects have been impacted by various challenges. On some points, the offer calculation process has not been good enough. At the same time, profitability was impacted by changes in building materials and the terms on which this was done. The development means that we are engaged in construction dialogue as well as contractual disputes. Therefore, we cannot share much more about the specific projects, but we have stated that one is scheduled for completion in the first half of 2026, with the other two targeting completion in the first half of 2027.

This means that the three B2B projects, unfortunately, will have a negative impact on gross profit and earnings in submitted tests next year and in the first half of 2027. The most significant impact will be seen in 2026. We reported unsatisfactory low margins on a few HE elements projects in the Q2 report and mentioned that these were seen to have some impact in Q3. This impact was, unfortunately, more negative than initially expected and caused by challenges in offer calculation combined with excessive project and housing unit complexity. We will not take on this type of projects going forward. The HE elements projects have been completed and delivered during Q3, and we do not expect any additional impact. Finally, we have seen postponed initiation on other B2B projects as building permits have not been obtained at the pace we had expected.

This means that we will not benefit from the revenue and earnings from these B2B projects in 2025 to the extent we initially expected. Let us follow up on 2025 guidance after this walkthrough. Please turn to slide four. Based on the development in our submitted test business, we adjusted our 2025 guidance two weeks ago. We still expect revenue to be within the range of DKK 2.9 billion-DKK 3.1 billion, but earnings expectations were reduced to DKK 60 million-DKK 80 million in EBITDA and DKK 15 million-DKK 35 million in EBIT. We expect to deliver around 1,000 housing units this year. With that, let us look at the financial highlights in Q3 on slide five. We continued to generate solid revenue growth of 35%, driven by high activity in the detached and semi-detached businesses.

Both segments have increased sales in recent months and reported more deliveries combined with a higher contribution from work in progress. Gross profit came in at DKK 110 million for a margin of 13.9%, which was 6.3 percentage points lower than the same period last year. This decline was attributable to the unsatisfactory development in the semi-detached business, which we have already covered. A higher contribution from detached could not fully compensate for this decline. EBITDA amounted to DKK 8 million and a margin of 0.9% compared to DKK 32 million and 5.5% last year. The decline was mainly due to the lower gross margin. In addition, the margin was impacted by higher staff costs in the quarter, following the balance ramp-up of our organization since Q3 last year. EBIT was minus DKK 4 million, down from DKK 20 million in Q3 last year.

Free cash flow came to DKK 0 million compared to minus DKK 4 million in the same quarter last year. A couple of weeks ago, we entered an agreement with Danske Bank and Nordea to increase the leverage covenant for our existing facilities agreement. We were pleased with the constructive dialogue with the banks. The agreement will provide us with ample headroom until end 2026, following the decline in EBITDA in semi-detached. Let us go to slide six for the highlights in the first nine months of 2025. Revenue increased by 31% to DKK 2 billion and 167 million in the first nine months, supported by all three segments. The positive development reflects continued sales increase in several consecutive quarters and satisfactory activity levels combined with higher revenue from work in progress. We saw a 25% increase in deliveries across segments, which came to 713 units compared to 569 units.

Progress was led by the detached segment. Gross profit grew by 5% to DKK 370 million for a margin of 17.1% compared to DKK 351 million and a margin of 21.3% in the comparison period. The higher gross profit was driven by the detached and Budenhauser segments, while the reasons for lower contributions from semi-detached were the same as mentioned for Q3. EBITDA amounted to DKK 47 million for a margin of 2.2%, down from DKK 81 million and a margin of 4.9% in the first nine months of 2024. The decline was driven by lower contribution from semi-detached and higher staff costs already mentioned. EBIT declined to DKK 14 million, down from DKK 44 million in the comparison period. Free cash flow was negative by DKK 26 million, down from DKK 126 million last year, driven by changes in working capital and sales outpacing deliveries. Net debt.

Amounted to DKK 309 million at end September, up from DKK 245 million a year before. The development was driven by changes in working capital and the decline in EBITDA. With this, let's go to slide seven for a view on the overall market conditions from Martin.

Martin, Company Executive/CEO, HusCompagniet: Thank you, Allan. We are pleased that we have maintained the positive traction in sales during 2025, despite a continuing decline in consumer confidence throughout the year after the positive trend in the second half of 2024. We want to maintain the good traction, and we have strengthened our local presence in Jutland with a new showroom in Horsens, and a dedicated forming office is in Aarhus during Q4 to support a positive development in the detached business. While consumer confidence is trending down, the Danish economy as such remains solid, supported by a high employment rate and largely unchanged core inflation, as well as long interest rates. Let's take a look at sales in Q3 on slide eight. In Q3, the total sales across segments grew by 56% to 376 units. Detached sales increased by 7%, and the pickup.

Continued, but at a slower pace than in the recent quarters. This is partly because of the stronger comparison figure, but we are also seeing damaged sales growth after a steady declining consumer confidence in 2025. Semi-detached was up 431% and driven by the subcontracting agreement for 156 units in the project Søgaard, which we mentioned in August. In Sweden, the sales level went down by 16 units. Please note that the contracts for 106 units with Zöllner, announced back in October last year, are still not included in semi-detached sales. In early October this year, we announced that building permits and acceptance from Wellcome were obtained for two remaining stages, which comprised 107 house units of the three-stage B2B project in Ringsted. Please turn to slide nine and an update on delivered houses. The total number of houses delivered increased by 71% to 390 units in Q3.

The development was driven by all segments, and more HE elements projects were completed, as also mentioned in the beginning of this call. The pickup in deliveries reflects the continued increase in sales in recent quarters. I will end this presentation with a quick look at our order backlog on slide 10. We continued to build our net order backlog with growth, which grew by 57% to DKK 2.2 billion at end September compared to the same period last year and has been growing constantly throughout the year. The positive development was driven mainly by detached and semi-detached. Detached accounted for 64% of the total order backlog. At the end of the quarter, semi-detached accounted for 31%, and the wooden houses in Sweden for 5%. Thank you for listening in. Please turn to the next slides for the Q&A session.

Conference Moderator: If you do wish to ask a question, you will need to press five-star on your telephone. To withdraw a question, press five-star again. Our first question comes from the line of Sebastian Grau from Nordea. Please go ahead, you are now unmuted.

Martin, Company Executive/CEO, HusCompagniet: Hi, Martin, and Allan, and thank you for taking my questions. I have a few starting on the current trading. So 62 units sold in October, detached units, that is. Looks like an acceleration from August and September. How does this number square with your own expectations for the month?

Allan, CFO, HusCompagniet: Yeah, hi, Sebastian. I would say the 62 units is lower than expected. Also, when we actually were going in October, we thought that we will end on a higher number, but we have seen some of the customers. You can see a little bit slow about signing on the contracts and more cautious also about signing the contracts. So it was actually what we have seen the last couple of weeks.

Martin, Company Executive/CEO, HusCompagniet: Okay. Is there any explanation behind this, do you think? Can it also be an explanation that you took down your marketing efforts at TAT here during the summer? Does that have an effect here? I'm just trying to get an understanding of the situation.

Allan, CFO, HusCompagniet: Yes, and thank you, Sebastian. Following the month after taking down our marketing investments, we saw a decline in the beginning, as we have previously mentioned, but actually the number of leads gained momentum pretty well shortly after. We have seen a fairly number of leads throughout Q3. It was actually, as Martin said, when we entered the month of October, we were expecting more from a sales perspective. Also, the number of leads were pretty decent. It is towards the second half of October that we have seen a number of leads slowing down and customers being more cautious in terms of signing contracts. I mean, the past couple of months, we have read a lot in the newspapers about people being resigned from their jobs from some of the largest companies in Denmark and generally a drop in consumer confidence.

There might be something into this. Of course, it's something that we are very much paying attention to and will do so in the next couple of months as well.

Martin, Company Executive/CEO, HusCompagniet: Sure, sure. Sorry for staying on this topic, but is there any silver lining here? Start November or it's too early to say at this point?

Allan, CFO, HusCompagniet: I would say it's definitely too early to say. Sales are being closed throughout the month and usually with a fair number of closings towards the end of the month. I would say it's too early to conclude on anything right now.

Martin, Company Executive/CEO, HusCompagniet: Where does this?

Allan, CFO, HusCompagniet: I will also mention here, I have been in this game for decades. There is some quarters, there is some month in the past that you can see a drop in sales and maybe other months there is a significant pickup in sales. Why are those months been down or up compared to what expected? I have seen it a lot of times before without actually one answer.

Martin, Company Executive/CEO, HusCompagniet: No, that's fair. Thank you for the clarification, Martin. Just wondering, where does this put you in terms of cost going forward? Does this deceleration here in October, does it in any way alter your investment plans, also considering that your organization at this point is back to a fairly large level compared to last year?

Allan, CFO, HusCompagniet: I think now, I think it's a totally fair question, Sebastian. I think right now we are paying attention to sales on a daily basis, and then we will take the measures required if needed. Right now, I think it's also there's a signal to us right now, and we need to monitor that signal carefully. I think that's the best we can conclude at this moment.

Martin, Company Executive/CEO, HusCompagniet: Sure. And then just one more question, I'll go back to the queue. And maybe it's a bit too early to talk about capital allocation with a leverage beyond four times EBITDA, but can you just remind us of your priorities at this point? So what is your capital allocation priorities going forward in 2026 and beyond?

Allan, CFO, HusCompagniet: I would say that in recent years, being able to build on own lands is something that boosts margins. We are considering approaches into which this is possible, considering capital allocation. The whole environment as such, I would say it's difficult to jump to any conclusion at this moment.

Martin, Company Executive/CEO, HusCompagniet: Okay, that's fair. Thank you for taking my questions.

Allan, CFO, HusCompagniet: Thank you.

Conference Moderator: Next up is Christian Toney from ABG Sundal Collier. Your line is open.

Martin, Company Executive/CEO, HusCompagniet: Thank you. I have a couple of questions as well. In the report, you state that you have taken actions to improve semi-detached and the profitability of projects. Can you maybe elaborate a bit more detail exactly what are you doing to ensure better earnings on these projects?

Allan, CFO, HusCompagniet: We have actually looked into a portfolio of things. We have to be sure that we will say no to some of the type of projects going forward. We will have more focus on our core also in the semi-detached, what the factory is good at, and as we can see, not so good as we have a lot of things also. Other things that we are looking into now that we will do better going forward. We will learn from the mistakes we have done. I'm so sure that we will have better margins going forward because that is actually what we are looking more into instead of gaining market share.

Martin, Company Executive/CEO, HusCompagniet: That makes sense. Then along the same line, when you now discuss new orders, what's your hurdle rate or what gross margin are you aiming for or sort of have as a target you need to price in to start with?

Allan, CFO, HusCompagniet: I would say I would not be too specific in terms of which margins we are aiming at here. I would say for us, profitability is important, and risk and contractual risk management is important going forward. As Martin said, we are going to be very much concerned about the margins required going forward to drive a profitable business. When we are talking gross margins, it has a lot of how big is the contract, how many units, the complexity, and so on. Gross margin can be one thing. Actually, the EBITDA margin is much more what we are focused on going forward. As Allan and I have mentioned for, I would say, a long time, we are focused that we will have an EBITDA margin in the level around 8-10%. That is our focus.

So much more the EBITDA margin than the gross margin.

Martin, Company Executive/CEO, HusCompagniet: That's fair enough, but that's actually also where I'm trying to get to because we can see your fixed cost is fairly stable in semi-detached. And given that you're not saying you aim to grow market share. Necessarily, then you can obviously do the reverse engineering and say, "Okay, if your fixed cost is what it is now. And you aim for 8% EBITDA margin, how high does your gross margin need to be in order to reach the 8% EBITDA margin?" And obviously, that sort of indicates you probably need to be around, say, 17-18% gross margin, which seems quite far from. Where you have been so far. So is it realistic, or is there something in my math which I'm not catching?

Allan, CFO, HusCompagniet: Yeah, I understand what you are saying here, Christian. That is also a fair push, but we already now have looked into that. We also now at some point and something in our B2B organization that we already have outsourced. Because when we are looking into, not again, the market share as well going forward in the same level that you have seen, we also are focused on the fixed cost. It is what we already now have looked into, and that is the focus for us. I think it's fair to say that we are looking into entire segment performance. That's one thing. The other thing being that when we report on the segment, costs are also distributed across the group based on some transfer pricing allocation. I think it's difficult to kind of conclude on the math 100%, to be honest.

Martin, Company Executive/CEO, HusCompagniet: Okay, so if I understood you correctly, are you indicating we should expect the fixed cost level to come down somewhat? What we're looking for?

Allan, CFO, HusCompagniet: No, what we are saying is it's too early to make any conclusion at this moment. We fully acknowledge that we have some write-downs on some projects that we are taking. To us, we are looking at how are we going to operate in the future. We are going to look at our cost, and we are going to look at how's the total semi-detached business to opt, or how can we optimize the semi-detached business in the best possible way. That is the conclusion you should take back, so to say.

Martin, Company Executive/CEO, HusCompagniet: Fair enough. Considering these three B2B projects will have a spillover into 2027, is it fair to say that these 8-10% EBITDA margin wouldn't be, I mean, realistic until at least 2028? I mean, do you need to have these three projects flushed out?

Allan, CFO, HusCompagniet: That is fair to say. Yes.

Martin, Company Executive/CEO, HusCompagniet: Good. My last question. Your financial leverage goes up, and you highlight the agreements you have made with your banks. You've also indicated that you would like to increase your proportion of own land. Is there any element of, I mean, the challenges with an increasing financial leverage, which is making it more difficult for you to increase your exposure to own land?

Allan, CFO, HusCompagniet: I would say, in general, we had really good dialogues with the banks, which have shown to be very supportive. I think the way that we look at the future is that own land is a part of our portfolio. The question is, how is the capital allocation going to be, as we mentioned before? I would say the agreement with the bank is not something that limits us from driving the business that we would like to.

Martin, Company Executive/CEO, HusCompagniet: Okay. That's quite clear. Fantastic. That was it all for me. Thank you.

Allan, CFO, HusCompagniet: Thank you. Thank you, guys.

Conference Moderator: As a reminder, press five star to ask a question. There will be a brief pause while new questions are being registered. As no one else has lined up for questions, I'll now hand it back to the speakers for any closing remarks.

Martin, Company Executive/CEO, HusCompagniet: Thank you again for taking an interest in HusCompagniet. If you have any follow-up questions, please reach out to us and have a nice day. Thank you.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.